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In This Issue [No.177] November 30, 2006 Supreme Court High Courts PIB RBI TRAI International Cases & News Site Links Roundup Archives Free Trial Contact us To keep you informed about the latest Legislative and Regulatory information manupatra.com publishes this e-roundup highlighting the recent changes brought about by the Notifications/Acts/Bills /Ordinances etc. About manupatra.com http://www.manupatra.com/ provides comprehensive and easy to use legal and related information over the Internet. 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State of M.P. Appellant was stopped midway by a police officer while he was speeding away in his scooter and his scooter was searched. The search revealed that the appellant was carrying opium. Thereupon, he was arrested on stop and was prosecuted for commission of an offence under Narcotic Drugs and Psychotropic Substances Act, 1985. Learned Sessions Judge however, recorded an order of acquittal holding that the search and seizure was vitiated in law as mandatory statutory requirements contained in Sections 50 and 42 of the NDPS Act were not complied with. The State preferred an appeal before the High Court against the said judgment of acquittal and High Court reversed the said judgment of the learned Sessions Judge holding that provisions contained in Section 57 of the NDPS Act are not mandatory and that said officer had no opportunity to comply with Section 42 of the NDPS Act. The conduct of the appellants in speedily crossing the road which aroused suspicion of police officer was enough to show that they had knowledge that contraband was concealed in the scooter. Hence, present appeal by appellant. Held, The High Court was dealing with a judgment of acquittal. It was, therefore, bound to show that the findings of the learned Sessions Judge were not legally tenable. It is well known that if two views are possible, benefit of doubt should be given to the accused. Appeal is allowed. Sasi Thomas Vs. State and Ors Appellant, brother of deceased, made complaints to various authorities regarding death of deceased who was alleged to have died as a result of heart attack. Accordingly, post mortem was conducted and it was revealed that deceased died as a result of poisoning and not heart attack. Appellant, therefore, filed writ petition before High Court praying for further investigation by CBI in said matter in terms of Sub-section (8) of Section 173 of the Code of Criminal Procedure and further investigation was directed to be done by CB-CID, who after investigation submitted a report charging respondent No. 4, husband of deceased, for abetment of suicide by deceased. Thereafter, trial in said matter commenced and 47 witnesses including appellant was examined. However, appellant again filed an application before High Court praying for an investigation into said matter by CBI and same was rejected by High Court. Hence, present appeal. Held, although it is not beyond the jurisdiction of this Court to direct further investigation by the CBI as contradistinguished from reinvestigation at this stage, but we decline to do so keeping in view the fact that 47 witnesses including the appellant himself have already been examined and recourse thereto can be taken if during trial a case therefore is found to be have been made out. Hotel and Restaurant Assocn. and Anr Vs. Star India Pvt. Ltd. and Ors. Appellants are members of Hotel Association and Restaurant Association They provide television services to their guests. Respondents herein are broadcasters or distributors of television services through distribution of Cable or Multi System Operators (MSOs). The broadcasters sought to increase the rates of television services provided to hotels on premise that TRAI had announced an increase of 7% in ceiling rate on ground of inflation. In view of the purported and arbitrary increase in the rates by respondent broadcasters in regard to services to the hotels, Appellants - Hotel Associations sought intervention of TRAI and notices were issued by TRAI to the respondent broadcasters. However, having regard to the threat of disconnecting the services by the broadcasters unless the rates demanded by them were paid, Appellant - Hotel Association of India filed an application before TDSTAT. Dismissing the applications filed by Appellants, TDSAT in its order opined that hotels are neither the consumers nor subscribers and respondents are well within their rights to demand the members of the petitioner associations to enter into agreements with them or their representatives for the receipt of signals for actual use of their guests or clients on reasonable terms and conditions and that TRAI should also consider whether it is necessary or not to fix the tariff for commercial purposes in order to bring about greater degree of clarity and to avoid any conflicts and disputes arising in this regard. Hence, present appeal. Held, TDSAT was not correct in opining that the regulators should also consider whether it is necessary or not to fix the tariff for commercial purposes in order to bring greater degree of clarity and to avoid any conflicts and disputes arising in this regard. High Courts Bombay Prof. Manohar Dhonde and Indian Bahujan Teachers Association (Ibta), Aurangabad Vs. The State of Maharashtra (through the Chief Secretary Mantralaya, Mumbai) and Ors. Petitioners were lady teachers working in Respondent Trust’s School and College. They filed Public Interest Litigations alleging that Respondent No. 6, Trustee of Respondent-Trust sexually harassed them. The petitioners complained about misconduct of Respondent Trustee to then President of Respondent-Trust but no action was taken against said persons. Hence, they approached Deputy Director of Education. Thereafter, all Teachers Unions/Organizations and Non Government Organizations (NGOs) came together by observing a bandh in order to persuade government to make a detailed enquiry into said matter. Pursuant to same, an Administrator was appointed and an enquiry was initiated under Rules 36 and 37 of M.E.P.S. Rules against Trustee, Vice Principal and Principal of Respondent-Institution. The One-Man Enquiry Committee exonerated Principal and Vice Principal of all charges and therefore, a complaint of sexual harassment was lodged with the police and present writ petition was filed alleging that constitution of enquiry committee and procedure adopted were in contravention of law laid down by Supreme Court in Vishaka’s case. Another writ petition (W.P. 282 of 2004) seeking redressal on same matter was filed by office bearers of two Teachers Associations. The same was opposed by respondents on ground that petitioners in PIL, although have identified themselves as office bearers of their association have not claimed that the PIL is being filed on behalf of and under the authority of the association. Held, petitioners in PIL although have identified themselves as office bearers of their association have not claimed that PIL is being filed on behalf of and under authority of association. Further, PIL (282 of 2004) although seeks redressal of legal injury alleged, it cannot be said to be for a class of persons, who by reason of being socially or economically in a disadvantaged position, are not in a position to take up legal battle themselves and hence is not maintainable. Petition dismissed. Karnataka Nadaf Traders Vs. The State of Karnataka, Through The Commissioner of Commercial Taxes Petitioner, a dealer covered by Sales Tax laws of Karnataka, filed annual return for assessment year and claimed exemption of a certain amount from levy of tax on total turnover. Based on a report by the intelligence wing of the department regarding some irregularities in the matter and in light of non-accounting of some transactions in books of accounts, proceedings were initiated against the petitioner and the Assessing Officer passed an assessment order against petitioner levying additional tax and penalty for suppression of material for purpose of levy of tax. The said order was challenged by way of an appeal by the petitioner and the Appellate Commissioner accepted the order of the Assessing Officer. Thereafter, the petitioner moved the Tribunal which also accepted the order of the Assessing Officer. Hence, present revision petition. Held, transaction of any kind ought to find a place in books of accounts. Books of accounts form the basis of tax collection by Department. If there is any suppression, it can be termed as suppression of material for purpose of levy of tax. Therefore, Assessing Officer has rightly taken a view of suppression of material for purpose of levy of tax in case on hand. We do not find any legal error in any one of orders by officers in case on hand. Hence, we deem it proper to accept orders of all authorities. Bargur Allabakshi Sab Vs. Gudagunti Patel Hussainsab & Smt. Shankaramma Petitioner-plaintiff, a farmer, had sold his paddy to defendant-respondent who is a commission agent. Said agricultural produce of petitioner was weighed in APMC Yard and handed over to defendants. APMC issued documents pertaining to same. Thereafter, petitioner filed civil suit against respondents for recovery of money with interest. Plaintiff was about to mark these documents as exhibits to prove that he has sold his paddy and the 1st defendant has purchased same from him, but trial court refused to grant permission to mark these documents contending that these documents attract stamp duty and that unless and until plaintiff pays duty and penalty on these two documents, these documents cannot be marked. Petitioner challenged same on ground that documents issued by APMC were as per statutory provisions of Karnataka Agricultural Produce Marketing (Regulation) Act 1966 and therefore trial court was wrong in holding that they attract stamp duty. Hence, present petition. Held, documents have come into existence while discharging duty by authorities under provisions of Karnataka Agricultural Produce Marketing (Regulation) Act 1966 and Rules framed thereunder and they do not attract stamp duty which amounts to conveyance showing transactions between plaintiff and defendant directly. Therefore, trial has misdirected itself in calling upon petitioner to pay stamp duty. Writ petition allowed. M/s. McDowell & Co. Vs. The Asst. Commissioner of Income-Tax Appellant-Company claimed investment allowance on effluent treatment plant installed in its IMFL Unit. Same was disallowed by assessing authority in light of Schedule 11 of Income Tax Act. An appeal was filed before the Appellate Commissioner and same was dismissed on ground that effluent treatment plant is an integral part of the machinery used for manufacture of alcoholic liquor, and concessional benefit provided by Section 32A(2)(b)(iii) of Income Tax Act is not provided to items listed in 11th Schedule of Income Tax Act, and as liquor figures in said list, appellant is not entitled to benefit claimed. Aggrieved by same, a second appeal was filed before Tribunal which endorsed view of Appellate Commissioner and dismissed second appeal. Hence, present appeal. Held, so long as section 32A(2C) is available on record, benefit cannot be denied by department. Any denial of benefit would be going against protection of environment in terms of intention of legislature as is gathered from very Section itself. Questions of law with regard to entitlement was answered in favour of assessee. Press Information Bureau VISA Guidelines for Chinese Business People, Professionals and their Dependents Streamlined PIB dated 20.11.2006: Visa guidelines for Chinese business people, professionals and their dependents have been streamlined. This has been done within the contours of an existing MoU signed between India and China in 2003. The same is aimed to facilitate a relatively longer stay of Chinese business people in India for bonafide purposes. Accordingly, Business visa of 6 months can be extended in India on merit up to one year and also multiple entries can be made. Similarly, Business Visa of 60 days can be extended up to 180 days and the entry can be increased from single to multiple here in India, on merit. Employment visa for Chinese nationals also can be extended in India up to 5 years on a yearly basis subject to no adverse activity and the foreigner continuing to keep his/her employment. Dependents of 'E' visa holders will get 'X'- Visa co-terminus with the duration of the visa of the principal visa holder. Chinese nationals married to Indians will also get 'X'-Visa. Proposal to amend Factories Act, 1948 PIB dated 27.11.2006: The proposal to make suitable amendments in the Factories Act, 1948 allowing flexibility for women to work in night shifts has been cleared by the government. The proposed amendment provides for protection clauses like provision of adequate safeguards in the factory as regards occupational safety and health, equal opportunity for women workers, adequate protection to their dignity, honour and safety, their transportation from the factory premises to the nearest point of their residence. The bill in this regard was introduced in Lok Sabha on August 16, 2005 and is pending to be taken up for discussions and passing. RBI DBOD Housing Loans - Implementation of Delhi High Court Orders Circular No. DBOD. Dir. BC.No.43/08.12.01/2006-07 Dated 17.11.2006: Vide the above circular RBI notifies the implementation of Delhi High Court Order with regard to sanctioning and disbursement of Housing Loans by banks. The Delhi High Court, deciding on a case relating to unauthorized buildings in Delhi, had directed RBI to issue directions to banks to take adequate safeguards before sanctioning or disbursing housing loans. Banks are therefore required to check whether the loan sought for is for authorized structure or an unauthorized structure and that Banks are to obtain an undertaking on an affidavit from the parties seeking such loans that the building is constructed as per sanctioned building plans and Banks shall also ensure that the sanctioned building plans are attached with the undertaking given by the parties. No loan should be given in respect of those properties which fall in the category of unauthorized colonies unless and until they have been regularized and development and other charges paid. No loan should also be given in respect of properties meant for residential use but which the applicant intends to use for commercial purposes and declares so while applying for loan. Telecom Regulatory Authority of India (TRAI) TRAI Mandates Interconnection for Intelligent Network Services Among all Telecom Service Providers Press Release No. 118/2006 Dated 27.11.2006: Telecom Regulatory Authority of India issued a Regulation on Interconnection amongst all telecom service providers for Intelligent Network (IN) Services. This Regulation aims to ensure that specified innovative services made available through IN will not be restricted to the telecom service providers who have deployed the Intelligent Network platform but are also be available to subscribers of other operators. Consumers are offered a number of innovative services like Free phone or Toll Free Number, Virtual Calling Card (VCC) for long distance calls etc are made available through Intelligent Network (IN) deployed by telecom service providers in their network. In the existing multiservice multi operator environment, these services can only be accessed by subscribers of a specific service provider and are not available to the subscribers of other service providers. To enable the subscribers of different service providers to access the IN services of other service providers, TRAI had issued the regulation which mandates that all service providers to provide interconnection to all eligible service providers so that subscribers of all Access Providers will have a choice of using the IN services of other service providers. This regulation would enable all telecom consumers in the country to have access to Multi-operator Multi-service IN platforms and no operator will be permitted to block his consumers from accessing IN platform belonging to other service providers. International Legal Cases and News Cases State of New York Vs. Consilvio Petitioners were in the custody of Department of Correctional Services (DOCS) and were nearing the end of their prison sentences for various felony sex offenses when they were examined by two Office of Mental Health (OMH) physicians for the purpose of involuntary commitment to an OMH facility. The OMH physicians certified that each petitioner suffered from a mental illness and that without inpatient psychiatric treatment each posed a high risk of re-committing sexual crimes if released into the community. Therefore, prison superintendents completed applications for involuntary commitment on medical certification, pursuant to Mental Hygiene Law § 9.27 and as petitioners' prison terms expired, they were each transported to a Psychiatric Center. Same was challenged by petitioners on ground that since they were undergoing a sentence of imprisonment, it was illegal for the State to transfer them into the mental health system pursuant to article 9 of the Mental Hygiene Law. They argued that the State was required to comply with the procedures set forth in Correction Law § 402, which governs the commitment of mentally ill prisoners to psychiatric hospitals, and that a prison superintendent is not authorized to file an application for involuntary commitment. Trial Court granted the petition by ordering petitioners' conditional release, holding that the State's use of article 9 of the Mental Hygiene Law deprived petitioners of protections afforded to prisoners under the provisions of Correction Law § 402. The Appellate Division reversed the decision of trial court and vacated the order for conditional release and dismissed the petition. It held that Trial Court erred by "conditionally releasing petitioners without conducting its own review as to the state of each individual's mental disability" as required by Mental Hygiene Law § 33.15. Hence, present appeal. Held, petitioners had all been in prison for years before the State sought to commit them civilly. No sudden, unforseen emergency required their confinement in a mental hospital. Since it cannot be said in this case that "immediate action was necessary for the protection of society," a strong argument can be made that petitioners were constitutionally entitled to a hearing before being deprived of the liberty that they would otherwise have obtained upon the completion of their prison terms. Because Correction Law § 402 provides for such a pre-deprivation hearing, it would be the applicable statute. Order of Appellate Court reversed. Morris Vs. Schroder Capital Mgt. Intl. & Schroder Inv. Mgt. N. Am. Inc Appellant in the present case was hired by respondent company in a senior position. His remuneration package included salary, bonus and other “deferred compensation awards” which could be claimed only after a specific period of time from date of issue of such award. Said award had a forfeiture clause attached to it that same would be forfeited upon employee joining a competitor company. Appellant resigned from respondent company and joined a competitor. He thereafter filed present action alleging breach of contract on part of respondent company to pay him deferred compensation award. Appellant argued that he had not left his job with respondent company voluntarily but that the respondent company had forced his departure by significantly diminishing his job responsibilities. Trial Court dismissed appellant claim’s in view of constructive discharge test under Federal Employment Discrimination law holding that appellant cannot claim a constructive discharge, even taking all factual allegations as true", because his "working conditions at the time of his resignation were not so intolerable that a reasonable person would have been forced to leave the job. The matter was referred by Second Circuit Court to Appellate Court on appeal. Held, the well-established constructive discharge test is appropriate in the context of the "employee choice" doctrine. The sense and purpose of the "employee choice" doctrine is that an employee is given a choice in either preserving his rights under an employment contract by not competing or losing them by engaging in competition. Ziegelmeyer Vs. United States Olympic Committee Plaintiff, a short-track Olympic speedskater, was injured when she fell on the ice during practice and hit the boards surrounding the rink. Although safety pads had been placed on the boards, plaintiff fell in such a way that her feet lifted the pads, causing her hip to strike the boards directly. Trial Court dismissed complaint filed by plaintiff and granted summary judgement. On appeal, Appellate Division held that plaintiff had assumed the risk of her injuries as she was aware of the exact manner in which the safety pads had been set up on the day of her accident and therefore, affirmed the decision of the Trial Court. On further appeal, New York Court of Appeals, also affirmed the decision of both lower courts and dismissed appeal with costs. News Temporary stay refused in case involving two New York Times Reporters The US Supreme Court announced that it would not grant temporary stay in a case involving federal investigators' access to the phone records of two New York Times reporters. The paper had filed suit to block access after US Attorney attempted to obtain records of telephone conversations involving the reporters directly from their telecom providers. A Chicago grand jury is seeking to identify the sources that leaked information on the planned terrorism probe into the funding of two Islamic charities to the journalists in 2001. The federal government asked the Supreme Court not to impede the federal prosecutor because of the pressing time concerns over the Justice Department's investigation into the leaks. In August, the US Second Circuit Court of Appeals had ruled in favor of the government, stating that the interests of law enforcement outweigh the reporters' constitutional protections under the First Amendment. The paper was seeking a stay pending the court's ruling on its application for certiorari in the case. Presidential Election Challenge dismissed by Congo High Court The Supreme Court of the Democratic Republic of Congo rejected a legal challenge by its Vice President against the official results of last month's presidential run-off election. The court declared that the challenge was unfounded and upheld the victory of incumbent President, who was declared winner by a margin of 16 points. Voting fraud has been an issue since the first round of election in July in Congo. Supporters of the Vice-President had set the Supreme Court on fire, forcing the court to relocate some of its offices and various persons were injured in various incidence of violence. Review declined by US Supreme Court on Philip Morris 'light' and ‘low tar’ cigarettes case The US Supreme Court declined to review an Illinois Supreme Court decision setting aside a $10.1 billion verdict against Philip Morris USA, for its marketing of "light" and "low-tar" cigarettes. The court issued its order in Price v. Philip Morris Inc. without comment. Late last year, the Illinois court dismissed the case, holding that US Federal Trade Commission regulations gave tobacco companies authority to denominate products as "light" or "low tar and nicotine" and that under the Illinois Consumer Fraud Act, companies cannot be held liable for behavior that has been specifically permitted by a regulatory body. Domestic Surveillance Probe opened by DOJ US Justice Department has launched an internal investigation into the Department of Justice’s (DOJ's) use of intelligence gathered under the National Security Agency's (NSA) domestic surveillance program. Matter has been notified to leaders of the House and Senate judiciary, intelligence and appropriations committees. Under the NSA Terrorist Surveillance Program, warrantless wiretaps are used to intercept telephone calls and e-mails of conversations of individuals suspected of being involved with the Al Qaeda terrorist network if one of person is located outside the US. After the program was first disclosed last year, both the DOJ and the Defense Department refused requests to investigate the program citing a lack of jurisdiction. The investigation however, will not cover the legality of the controversial program. In August, a federal judge ruled the program as unconstitutional and said decision is currently on appeal. 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